TOY CO INC. Statement of Financial Position (partial) December 31 2018 2017 2016

Question

TOY CO INC. Statement of Financial Position (partial) December 31 2018 2017 2016 Current assets Cash 30 92 60 40 500 572 29 $1,430 1,313 1,201 $ 883?819?755 59 584 526 52 Held for trading investments 582 522 Accounts receivable, net Inventory Prepaid expenses Total current assets Total current liabilities Additional information 2018 ? 2017 2016 (in thousands) Allowance for doubtful accounts Net credit sales Cost of goods sold 50 45 40 4,190 3,962 3,719 2,895 2,660 2,350 Calculate all possible liquidity ratios for 2018 and 2017. (Round current ratio to 2 decimal places e.g. 2.66. Round receivables turnover and inventory turnover to 1 decimal place e.g. 6.2. Round collection period and days sales in inventory to 0 decimal places e.g. 1,266. Enter working capital amounts in thousands e.g. 525.) 2018 2017 Working capital Current ratio Receivables turnover Collection period Inventory turnover Days sales in times times days days times times days days

Explanation / Answer

2018 2017 Working capital ratio Current assets/Current liabilities 1430/883 1313/819 1.619479 1.603175 Working capital 547 494 (Current assets-current liabilities) Current Ratio 1430/883 1313/819 1.619479 1.603175 Receivable turnover ratio Credit sales/account receivable 4190/682 3962/584 6.143695 6.784247 Inventory turnover ratio Cost of goods sold/Average inventory Cost of goods sold 2895 2660 Opening stock 526 572 Closing stock 622 526 Average stock 526+622 572+526 1148 1098 2.521777 2.422587 Collection period 365 days/receivable turnover ratio 365/6.14 365/6.78 59.44625 53.83481 Days sale in inventory 365/2.5 365/2.422 365/Inventory turnover ratio 146 151

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